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Pay-to-Play Rules for Swap Dealers

August 30, 2016, Covington Alert

As election season enters full swing, with political candidates at all levels actively soliciting campaign donations from individuals and companies, it is an ideal time for all companies to review the policies and procedures in place for political donations. While the SEC’s pay-to-play rules governing registered investment advisers and their “covered associates” are well known, the rules governing swap dealers are more obscure. Specifically, swap dealers and security-based swap dealers are subject to the “pay-to-play” rules of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) respectively, which impose restrictions on the making of campaign contributions to officials of certain government entities with which a swap dealer does business.

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The U.S. Commodity Futures Trading Commission (the “CFTC” or the “Commission”) has been very active since the beginning of this year, despite the change in Presidential Administration, the lack (until recently) of appointed Commissioners, and the turnover of leadership at both the Commission and Division level. Notably, the Commission has announced over 20 ...

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